Correlation Between Regional Bank and J Hancock
Can any of the company-specific risk be diversified away by investing in both Regional Bank and J Hancock at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Regional Bank and J Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Bank Fund and J Hancock Ii, you can compare the effects of market volatilities on Regional Bank and J Hancock and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Regional Bank with a short position of J Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Bank and J Hancock.
Diversification Opportunities for Regional Bank and J Hancock
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regional and JROUX is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Regional Bank Fund and J Hancock Ii in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Hancock Ii and Regional Bank is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Regional Bank Fund are associated (or correlated) with J Hancock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Hancock Ii has no effect on the direction of Regional Bank i.e., Regional Bank and J Hancock go up and down completely randomly.
Pair Corralation between Regional Bank and J Hancock
Assuming the 90 days horizon Regional Bank is expected to generate 1.38 times less return on investment than J Hancock. In addition to that, Regional Bank is 2.45 times more volatile than J Hancock Ii. It trades about 0.02 of its total potential returns per unit of risk. J Hancock Ii is currently generating about 0.08 per unit of volatility. If you would invest 1,079 in J Hancock Ii on November 9, 2024 and sell it today you would earn a total of 344.00 from holding J Hancock Ii or generate 31.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Bank Fund vs. J Hancock Ii
Performance |
| Timeline |
| Regional Bank |
| J Hancock Ii |
Regional Bank and J Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Bank and J Hancock
The main advantage of trading using opposite Regional Bank and J Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Bank position performs unexpectedly, J Hancock can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in J Hancock will offset losses from the drop in J Hancock's long position.| Regional Bank vs. Calvert Short Duration | Regional Bank vs. Blackrock Global Longshort | Regional Bank vs. Nuveen Short Term | Regional Bank vs. Alpine Ultra Short |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Correlations module to find global opportunities by holding instruments from different markets.
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